Bitcoin Price Eyes Double Bottom Reversal After $4K Defense

Bitcoin’s defense of key long-term support for the second time in four days is a positive sign for a potential recovery rally.

The leading cryptocurrency by market value fell below $4,242 (low of Wednesday’s inside-day candle) in the Asian trading hours, putting the bears back into the driver’s seat. As a result, BTC fell below the 200-week exponential moving average (EMA) of $4,182 earlier today.

The breach of the EMA support, however, may have trapped the bears on the wrong side of the market, as BTC is currently trading at $4,330 on Bitstamp, having clocked an intraday low of $4,061 earlier today.

It is worth noting that the long-term EMA was first breached on Tuesday. The subsequent sell-off, however, ended at the 14-month low of $4,048 and prices recovered to $4,500 on the following day.

The repeated failure to beat the long-term support indicates the bears have likely run out of steam. As a result, a stronger corrective rally could be in the offing.

4-hour chart

On the 4-hour chart, the relative strength index (RSI) has created a bullish divergence with higher lows.

As a result, BTC looks set to test $4,635 – the neckline of the double-bottom bullish reversal pattern. A break above that, if confirmed, would open up upside toward $5,100 (target as per the measured height method).

Daily chart

As seen above, the 14-day relative strength index is holding below 30.00 for the ninth day straight, signaling ongoing oversold conditions.

The 5- and 10-day EMAs, currently at $4,546 and $4,933, respectively, are still trending south. Therefore, corrective rallies above the 10-day EMA, if any, could face exhaustion near $5,000.

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.